Sunday, November 6, 2011

Did we add 80,000 or 277,000 jobs in October?

You have probably heard or seen reports of the Bureau of
Labor Statistics (BLS) survey released Friday that said the U.S. economy added
80,000 jobs in October. What you may not
have heard is that a different BLS job survey for October showed that the
economy added 277,000 jobs and this other survey may be a more accurate picture
of job creation during a recovery. Okay,
you are saying “huh.” Let me explain.

BLS conducts two employment surveys each month. One, called the “Establishments survey” is a
survey of businesses. The other, called
the “Household survey,” is a survey of households. Most economists and most of the media report
the results of the Establishment survey because the sample size is larger—440,000
work sites vs. 60,000 households.
However, the Household survey can be more accurate during a recovery
from a recession because it picks up the formation of new companies
faster. That is why the Establishment
survey typically is revised upward each year to match actual payroll tax
reports.

The job creation story is much more positive if you just
consider the Household survey. For
example, that survey says U.S. employment rose by 277,000 jobs in October,
398,000 in September and 331,000 in August.
That is the best three-month growth in jobs the Household survey has
shown since 2006.

Also, according to the Household survey for October, fewer
people are discouraged about their job prospects, more people who had been
working part-time had found full time work, more people said they were out
looking for a job, and more people said they were leaving their current job to
find a new one.

If the economy is really doing a better job of job creation
than the Establishment survey indicates, that’s good news for the country, good
news for Obama, and bad news for Republicans.
Let’s hope the Household survey has got the job creation picture right.